Influence of a two-part electricity price system on the profitability of natural gas power generation enterprises in China

A two-part electricity price system was adopted in Shanghai, Zhejiang and Jiangsu to address the problems high cost and difficult operation in natural gas power generation enterprises. The influence of the two-part electricity price system on the profitability of natural gas power generation enterprises was evaluated by comparatively analyzing the electricity price policies applied in Shanghai, Zhejiang and Jiangsu and their implementation effects. Then, based on three major business indicators of different types of generator sets, namely financial internal rate of , economic net present value and dynamic payback period of investment, the economy of different types of natural gas power generation plants was considered using the project economic analysis model. Compared with the electricity price, the current two-part electricity price resulted in slight drop of electricity price level, which has a certain impact on the operation of enterprise. In the long run, however, it is conducive to the formation of a sustainable development mechanism. Two-part electricity price wais set up by the local government according to the specific situations after sufficient investigation and calculation. Under this policy, most enterprises are near the break-even point. Enterprises with good comprehensive conditions and high management levels could achieve a certain profit, otherwise, they will have a deficit. When the energy price was fixed at a value greater than the break-even point, the benefit of an enterprise increased with the increase of annual utilization hours, and conversely the benefit decreased with the increase of annual utilization hours.